The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Goosehead Insurance, Inc. (NASDAQ:GSHD) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is GSHD a good stock to buy now? Investors who are in the know were becoming hopeful. The number of long hedge fund bets went up by 7 in recent months. Goosehead Insurance, Inc. (NASDAQ:GSHD) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GSHD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with GSHD holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a look at the key hedge fund action surrounding Goosehead Insurance, Inc. (NASDAQ:GSHD).
Do Hedge Funds Think GSHD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in GSHD a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Zevenbergen Capital Investments, managed by Nancy Zevenbergen, holds the largest position in Goosehead Insurance, Inc. (NASDAQ:GSHD). Zevenbergen Capital Investments has a $35.4 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Charles Akre of Akre Capital Management, with a $21.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Leonard A. Potter’s Wildcat Capital Management, Richard Driehaus’s Driehaus Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to Goosehead Insurance, Inc. (NASDAQ:GSHD), around 5.89% of its 13F portfolio. Highside Global Management is also relatively very bullish on the stock, earmarking 3.53 percent of its 13F equity portfolio to GSHD.
As aggregate interest increased, key money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, established the most valuable position in Goosehead Insurance, Inc. (NASDAQ:GSHD). Winton Capital Management had $3.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $3.1 million position during the quarter. The following funds were also among the new GSHD investors: Renaissance Technologies, Noam Gottesman’s GLG Partners, and Bruce Kovner’s Caxton Associates LP.
Let’s also examine hedge fund activity in other stocks similar to Goosehead Insurance, Inc. (NASDAQ:GSHD). These stocks are Affiliated Managers Group, Inc. (NYSE:AMG), KBR, Inc. (NYSE:KBR), Portland General Electric Company (NYSE:POR), SAGE Therapeutics Inc (NASDAQ:SAGE), Safehold Inc. (NYSE:SAFE), Vivint Smart Home, Inc. (NYSE:VVNT), and National Beverage Corp. (NASDAQ:FIZZ). All of these stocks’ market caps are similar to GSHD’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $143 million in GSHD’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Vivint Smart Home, Inc. (NYSE:VVNT) is the least popular one with only 5 bullish hedge fund positions. Goosehead Insurance, Inc. (NASDAQ:GSHD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GSHD is 65.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on GSHD as the stock returned 40.4% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.